When the mandatory insurance provisions of the health control legislation (HR 3590) kick in, will not having medical insurance (as defined by politicians) land you in prison?

Short answer: The process is the same as if you don’t pay your taxes. You could end up in prison, but that usually does not happen. The government has other ways to get what they want from you.

The Colorado Center on Law and Policy (CCLP) issued a “Fact Sheet” about the recent health control legislation, HR 3590.  One section says:

Tax penalties for people who do not have insurance will be phased in beginning in 2014. In 2016, the penalty will be $695 per person, with a maximum penalty of $2,085 for a family, or 2.5 percent of income, whichever is greater. No one will go to jail for not having health insurance.

To be more precise, having medical insurance is not enough to avoid the tax penalty. Your insurance policy must meet the requirement of what politicians define as insurance. I’ve written several blog posts on how mandatory insurance can and has made insurance policies illegal.

What about going to jail?  Citing the above fact sheet, Erika Stutzman of the (Boulder) Daily Camera has repeated this claim:

No one will go to jail for not having insurance; no one will be charged with any crimes. You are not forced by force to have insurance. Just choose to pay your tax penalty …

Stutzman and the CCLP argue that you won’t go to jail for not having legal insurance. You just have to pay a penalty. But this begs the question: what happens if you do not pay the penalty?   The Daily Caller reports:

IRS Commissioner Doug Shulman] noted that the health-care bill expressly forbids the agency from freezing bank accounts, seizing assets or pursuing criminal charges, but when pressed said the IRS would most likely use tax refund offsets to penalize those that don’t comply with the mandate. The IRS uses refund offsets to collect from individuals that owe the federal government a delinquent debt.

So if you are due a tax refund, then you can not avoid paying the penalty.  So I guess you won’t end up in prison.  Government just confiscates your money for not buying a product politicians think you should buy. But it’s not prison!

But what if you do not have any pending tax refunds? What if you do not like overpaying your taxes, which is in effect an interest-free loan to the government? Then what?

You’d think the penalty would be akin to not paying your taxes, and then not paying the penalties that result from it.  But the IRS Commissioner, says the Daily Caller, says the health control bill “expressly forbids the agency from freezing bank accounts, seizing assets or pursuing criminal charges.” Hmm.

PolitiFact has addressed this question in detail.

[Sen. John Ensign, R-Nev] questioned [Joint Committee on Taxation chief of staff Thomas] Barthold — the top professional staffer on the joint House-Senate panel that advises both chambers on tax legislation — about what penalties would be assessed.Barthold told him that they would be “penalties under the Internal Revenue Code.” Ensign asked for “the maximum penalty” for a “willful” — that is, intentional — violation. Is it “possible that somebody could go to jail over this?” Ensign asked.

Barthold answered, “Could be criminal, yes, if it were considered an attempt to defraud.”

Later, several news outlets reported that Barthold delivered a hand-written note to Ensign after the hearing confirming that violators could be charged with a misdemeanor and could face up to a year in prison or a $25,000 penalty. When PolitiFact contacted the Joint Committee on Taxation to confirm the contents of the letter, a spokeswoman said that such communications were confidential, but she pointed us to Section 7203 of the Internal Revenue Code, titled, “Willful failure to file return, supply information or pay tax.”

The text of that section appears to jibe with the reported contents of Barthold’s note. It says, “Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution.” (A House Ways and Means Committee spokesman said that the same rules would apply to the House bill.)

… And it’s worth noting that, as with other violations in which people have refused to pay taxes, sending someone to prison is an extreme measure used as a last resort.First off, as Barthold testified to the committee, the Internal Revenue Service would likely undertake normal collection procedures such as wage garnishments before resorting to a criminal case. Tax lawyers we spoke to said it’s possible for an unsuccessful debt collection to be referred to federal criminal prosecutors, though criminal prosecutions more commonly arise from audits.

If a nonpayment case with “willful” aspects did make it to the criminal docket, then it still has a long way to go until prison time kicks in.

I’m not sure how the wage garnishment would be allowed if the health control legislation forbids “seizing assets,” as the IRS chief said.